Sample Chapter PDF

mcs12648_ch01_002-031.
indd Page 2 10/17/11 1:53 PM user-f462 /Volumes/206/MH01510/mcs12648_disk1of1/0078112648/mcs12648_pagefiles
PART ONE: INTRODUCTION

1
Introduction to the Field
of Organizational Behavior
learning objectives
After studying Chapter 1, you should be able to:
LO1 Define organizational behavior LO3 Debate the organizational

and organizations, and discuss opportunities and challenges
the importance of this field of of globalization, workforce
inquiry. diversity, and emerging
employment relationships.
LO2 Compare and contrast the
four current perspectives of LO4 Discuss the anchors on
organizational effectiveness, as which organizational behavior
well as the early goal attainment knowledge is based.
perspective.
2
mcs12648_ch01_002-031.indd Page 3 10/17/11 1:53 PM user-f462 /Volumes/206/MH01510/mcs12648_disk1of1/0078112648/mcs12648_pagefiles
Steel can manufacturing may be a mature industry, but the folks at
Brasilata dont see it that way. The Brazilian company has figured out how to tap into
employee knowledge and motivation to fuel its extraordinary productivity and
innovation. It has won top industry and supplier awards almost every year, including
the coveted Sherwin-Williams Best Packaging Supplier award. It has also been
ranked among the 20 most innovative companies in Brazil, as well as one of the best
places to work in that country.
At the heart of Brasilatas business model is the Simplification Project (Projeto
Simplificao), which encourages all 900 employees across the companys four
production facilities to think up as many suggestions as possible. The Simplification
Project is like panning for ideas (incremental innovations), thereby stimulating the
internal innovative environment and entrepreneurial spirit, explains Brasilatas CEO
Antonio Carlos lvares Teixeira, who is also a business professor.
Ideas are so important that Brasilata employees are called inventors, and everyone
signs an innovation contract that reinforces their commitment to continuous
improvement. After a slow start two decades ago (with only one idea per person each
year), the company now receives more than 200,000 ideas each yearan average of
more than 220 ideas per employee. Brasilata holds a party every six months, at which all
employees, celebrate teams and individuals with the best ideas. Employees are also
rewarded with bonuses representing 15 percent of net annual profits.
Some employee suggestions have sown the seeds of innovative products, such as
an award-winning paint can that withstands heavy impact when dropped. Other
ideas have dramatically improved productivity. Some changes have made jobs
redundant, but employees arent worried. Brasilata has been able to maintain a no-
layoff policy even during the worst downturns.

Brasilatas success is also built on teamwork. The company compares its workforce
with a soccer team, in which winning goals depends on everyone. Teamwork is one
of the leading forces of the company, says the companys website. The company
also emphasizes employee initiative and open communication. In our opinion,
innovative action is stimulated by a corporate environment where the
communications channels are always open, new ideas are respected and errors
tolerated, explains Brasilatas CEO Teixeira.1
Brasilata has become one of the most innovative and productive manufacturing businesses in Brazil by applying organizational behavior practices.
3
4 Part One Introduction
Welcome to the Field of Organizational Behavior!

The opening story about Brasilata reveals some important truths about organizations that
succeed in todays turbulent environment. In every sector of the economy, organizations
need to be innovative, employ skilled and motivated people who can work in teams, have
leaders with foresight and vision, and make decisions that consider the interests of multiple
stakeholders. In other words, the best companies succeed through the concepts and prac-
tices that we discuss in this book on organizational behavior.
The purpose of this book is to help you understand what goes on in organizations, in-
cluding the thoughts and behavior of employees and teams. We examine the factors that
make companies effective, improve employee well-being, and drive successful collabora-
tion among coworkers. We look at organizations from numerous and diverse perspectives,
from the deepest foundations of employee thoughts and behavior (personality, self-concept,
commitment, etc.) to the complex interplay between the organizations structure and
culture and its external environment. Along this journey, we emphasize why things happen
and what you can do to predict and manage organizational events.
We begin in this chapter by introducing you to the field of organizational behavior (OB)
and why it is important to your career and to organizations. Next, this chapter describes the
ultimate dependent variable in OB by presenting the four main perspectives of organiza-
tional effectiveness. This is followed by an overview of three challenges facing organiza-
tions: globalization, increasing workforce diversity, and emerging employment
relationships. We complete this opening chapter by describing four anchors that guide the
development of organizational behavior knowledge.
The Field of Organizational Behavior

Organizational behavior (OB) is the study of what people think, feel, and do in and around
LO1 organizations. It looks at employee behavior, decisions, perceptions, and emotional
responses. It examines how individuals and teams in organizations relate to one another and
to their counterparts in other organizations. OB also encompasses the study of how organi-
zations interact with their external environments, particularly in the context of employee
behavior and decisions. OB researchers systematically study these topics at multiple levels of
analysis, namely, the individual, team (including interpersonal), and organization.2
The definition of organizational behavior begs the question: What are organizations?
Organizations are groups of people who work interdependently toward some purpose.3
Notice that organizations are not buildings or government-registered entities. In fact, many
organizations exist without either physical walls or government documentation to confer
their legal status. Organizations have existed for as long as people have worked together.
Massive temples dating back to 3500 bc were constructed through the organized actions of
multitudes of people. Craftspeople and merchants in ancient Rome formed guilds, com-
plete with elected managers. More than 1,000 years ago, Chinese factories were producing
125,000 tons of iron each year.4
Throughout history, these and other organizations have consisted of people who com-
municate, coordinate, and collaborate with one another to achieve common objectives.
One key feature of organizations is that they are collective entities. They consist ofhuman
beings (typically, but not necessarily, employees), and these people interact with one an-
other in an organized way. This organized relationship requires some minimal level of com-
munication, coordination, and collaboration to achieve organizational objectives. As
such, all organizational members have degrees of interdependence with one another; they
accomplish goals by sharing materials, information, or expertise with coworkers.
A second key feature of organizations is that their members have a collective sense of
purpose. This collective purpose isnt always well defined or agreed on. Furthermore,
though most companies have vision and mission statements, these documents are
Chapter One Introduction to the Field of Organizational Behavior 5
Until the 1930s, most

organizational research and
practice tried to improve work
efficiency by changing working
conditions and job duties.
Employee thoughts and feelings
were ignored and usually
considered irrelevant. Elton
Mayo (left in photo); his research
assistant, and later professor in
his own right, Fritz Roethlisberger
(right); and others at Harvard
University adopted a completely
different view. Their human
relations studies at Western
Electric Hawthorne Works near
Chicago found that employee
attitudes, formal team dynamics,
informal groups, and supervisor
leadership style strongly
influenced employee performance
and well-being. Historians suggest
that this human relations view laid
the foundation for the field of sometimes out of date or dont describe what employees and leaders try to achieve in
organizational behavior as we reality. Still, imagine an organization without a collective sense of purpose. It would be
know it today.7 a collection of people without direction or unifying force. So, whether its manufactur-
ing steel cans at Brasilata or designing better aircraft at Boeing, people working in orga-
nizations do have some sense of collective purpose. A company is one of humanitys
most amazing inventions, says Apple Inc. Chairman and cofounder Steven Jobs. Its
totally abstract. Sure, you have to build something with bricks and mortar to put the
people in, but basically a company is this abstract construct weve invented, and its
incredibly powerful.5
HISTORICAL FOUNDATIONS OF
ORGANIZATIONAL BEHAVIOR
Organizational behavior emerged as a distinct field around the early 1940s, but organiza-
tions have been studied by experts in other fields for many centuries. The Greek philoso-
pher Plato wrote about the essence of leadership. Around the same time, the Chinese
philosopher Confucius discussed the virtues of ethics and leadership. In 1776, Adam Smith
discussed the benefits of job specialization and division of labor. One hundred years later,
the German sociologist Max Weber wrote about rational organizations, the work ethic, and
charismatic leadership. Soon after, industrial engineer Frederick Winslow Taylor proposed
systematic ways to organize work processes and motivate employees through goal setting
and rewards.6
From the 1920s to the 1940s, Elton Mayo, Fritz Roethlisberger, and their Harvard
University colleagues introduced the human relations school of management, which
emphasized the study of employee attitudes and informal group dynamics in the work-
place. Also during that time, political philosopher and
social worker Mary Parker Follett advocated new ways
organizational behavior (OB) organizations of thinking about several OB topics, including con-
The study of what people think, Groups of people who work structive conflict, team dynamics, organizational de-
feel, and do in and around interdependently toward some mocracy, power, and leadership. In the late 1930s,
organizations. purpose. Chester Barnard wrote insightful reviews of organiza-
tional communication, coordination, leadership and
authority, organizations as open systems, and team dynamics.8 This brief historical tour
indicates that OB has been around for a long time; it just wasnt organized into a unified
discipline until the 1940s.
WHY STUDY ORGANIZATIONAL BEHAVIOR?

Organizational behavior instructors face a challenge: Students who have not yet begun
their careers tend to value courses related to specific jobs, such as accounting and market-
ing.9 However, OB doesnt have a specific career paththere is no vice president of
OBso students sometimes have difficulty recognizing the value that OB knowledge can
offer to their future. Meanwhile, students with several years of work experience identify
OB as one of the most important courses. Why? Because they have learned through expe-
rience that OB does make a difference to ones career success. OB helps us make sense of
and predict the world in which we live.10 We use OB theories to question our personal
beliefs and assumptions and to adopt more accurate models of workplace behavior. Some
experts suggest that OB knowledge even helps us make sense of the broader world, not
just what goes on inside organizations.11
But probably the greatest value of OB knowledge is that it helps people get things done
in organizations.12 Everyone in business, government, and not-for-profit firms works with
other people, and OB provides the knowledge and tools to interact with others more effec-
tively. Building a high-performance team, motivating coworkers, handling workplace con-
flicts, influencing your boss, and changing employee behavior are just a few of the areas of
knowledge and skills offered in organizational behavior. No matter what career path you
choose, youll find that OB concepts play an important role in how you perform your job
and work more effectively within organizations.
Organizational Behavior Is for Everyone Organizational behavior is important

for anyone who works in organizations, not just for managers. In fact, this book pioneered
the notion that OB knowledge is for everyone. Whether you are a geologist, financial ana-
lyst, customer service representative, or chief executive officer, you need to understand and
apply the many organizational behavior topics that are discussed in this book. Yes, organi-
zations will continue to have managers, and this book recognizes the relevance of OB
knowledge in these vital roles. But this book also recognizes the reality that all employees
are increasingly expected to manage themselves and work effectively with one another in
the workplace. In the words of one forward-thinking OB writer more than four decades
ago: Everyone is a manager.13
OB and the Bottom Line Up to this point, our answer to the question Why
study OB? has focused on how organizational behavior knowledge benefits you as
anindividual. However, OB knowledge is just as important for the organizations finan-
cial health. Brasilata has flourished because it leverages human capital, employee en-
gagement, creativity, and teamwork. Numerous studies have reported that these and
other OB practices discussed in this book tend to improve the organizations sur-
vival and success.14
organizational effectiveness
For example, one investigation found that hospitals with higher levels of specific
A broad concept represented OB activities (e.g., training, staff involvement, reward and recognition) have lower
by several perspectives, patient mortality rates. Another study found that companies receiving best place to
including the organizations fit work awards have significantly higher financial and long-term stock market perfor-
with the external environment, mance. And as we will learn in Chapter 5, employee engagement is associated with
internal subsystems
significantly higher sales and profitability. The bottom-line value of organizational be-
configuration for high
performance, emphasis on havior is also supported by human capital and investment portfolio studies. These in-
organizational learning, and vestigations suggest that specific OB characteristics (employee attitudes, worklife
ability to satisfy the needs of balance, performance-based rewards, leadership, employee training and development,
key stakeholders. etc.) are important positive screens for selecting companies with the best long-term
stock appreciation.15
Perspectives of Organizational Effectiveness

Apple, Inc., and Google, Inc., are the two most admired companies in the world, according
LO2 to Fortune magazines annual list.16 Yet, neither of these companies was on anyones radar
screen a dozen years ago. Apple was on life support in the late 1990s, barely clinging on to a
few percentage points of market share in the computer industry. Google wasnt even regis-
tered as a company. It was little more than a computer project by two Stanford PhD stu-
dents that was quickly outgrowing the dorm room where their equipment was housed.
How did Apple and Google achieve their incredible success? They relied on innovation
as their engine for growth, invested in and supported their employees, were led by visionary
leaders, and applied many other practices that we will discuss throughout this book. More
generally, Apple and Google have consistently applied the four perspectives of organiza-
tional effectiveness that we discuss over the next few pages.
Almost all organizational behavior theories have the implicit or explicit objective of
making organizations more effective.17 In fact, organizational effectiveness is considered
the ultimate dependent variable in organizational behavior.18 This means that organiza-
tional effectiveness is the outcome that most OB theories are ultimately trying to achieve.
Many theories use different labelsorganizational performance, success, goodness, health,
competitiveness, excellencebut they are basically presenting models and recommenda-
tions that help organizations be more effective.
Over the next several pages, we will describe a coherent model of organizational effec-
tiveness that incorporates four complementary perspectives. But first, we need to mention
the now discredited goal attainment definition of organizational effectiveness. This view,
which was popular for many years, states that companies are effective when they achieve
their stated organizational objectives.20 According to this definition, Home Depot, the
worlds largest retailer of home improvement products, would be an effective organization
if it meets or exceeds its annual sales and profit targets. Today, we know this isnt necessarily
so. Any leadership team could set corporate goals that are easy to achieve yet would put the
organization out of business. These goals could also be left in the dust by competitors more
Apple, Inc., is rated as one aggressive objectives.
of the worlds most admired Worse still, some goals might aim the organization in the wrong direction. Consider
companies, yet a dozen years the following true story: The board of directors of a major airline gave the incoming CEO
ago it was on life support with
a dwindling computer market
share. Apples incredible
turnaround illustrates how
companies achieve success
by paying attention to all four
perspectives of organizational
effectiveness. Apple deftly
anticipated and fluidly adapted
to rapidly changing consumer
needs (such as by introducing
the iPod, iPhone, and iPad). It
became a learning organization
by hiring key people and
acquiring small firms. It nurtured
high-performance teams for
hardware design, software
development, and marketing.
And except for a few trip-ups,
it has generally met stakeholder
expectations and improved its
corporate social responsibility.19
a mandate to reduce costs and dramatically improve profitability. The CEO accom-
plished these organizational goals by reducing the training budget and canceling the
purchase of new aircraft. Within a few years (after the CEO had taken a job with another
airline), the company was suffering from higher maintenance costs to keep the old
planes flying safely and was losing customers to airlines with better-trained staff and
more modern fleets. This airline never recovered; it was eventually acquired by a larger
competitor. The CEO achieved the companys goals, but the result was a less effective
organization in the long run.
This book takes the view that the best yardstick of organizational effectiveness is a com-
posite of four perspectives: open systems, organizational learning, high-performance work
practices, and stakeholders.21 Organizations are effective when they have a good fit with
their external environment, are learning organizations, have efficient and adaptive internal
subsystems (i.e., high-performance work practices), and satisfy the needs of key stake-
holders. Lets examine each of these perspectives in detail.
OPEN SYSTEMS PERSPECTIVE

The open systems perspective of organizational effectiveness is one of the earliest and most
well-entrenched ways of thinking about organizations.22 Indeed, the other major organiza-
tional effectiveness perspectives might be considered detailed extensions of the open sys-
tems model. The open systems perspective views organizations as complex organisms that
live within an external environment, rather like the illustration in Exhibit 1.1. The word
open describes this permeable relationship, whereas closed systems operate without depen-
dence on or interaction with an external environment.
As open systems, organizations depend on the external environment for resources, in-
cluding raw materials, job applicants, financial resources, information, and equipment. The
external environment also consists of rules and expectations, such as laws and cultural
norms, that place demands on how organizations should operate. Some environmental re-
sources (e.g., raw materials) are transformed into outputs that are exported to the external
environment, whereas other resources (e.g., job applicants, equipment) become subsystems
in the transformation process.
EXHIBIT 1.1 Open Systems Perspective of Organizations

External Environment
Subsystem
Accounting
Technological subsystem
m
subsystem
ste
bsy
Sub
Su
Raw materials m
syste
sys
Sub Products/services
tem
Human resources Engineering

Su
subsystem Shareholder dividends

bs
Information Transforming inputs to outputs

ys
te
Community support
m
Financial resources Managerial Marketing/Sales

Pu bsys
subsystem Waste/pollution
su
Subsystem subsystem
rch te
Equipment
as m
ing
tem
ys
bs ural
Production Su Cult tem
subsystem sys
sub
Socia
liza
subsy tion
stem
Feedback Feedback
Inside the organization are numerous subsystems, such as departments, teams, informal
groups, work processes, technological configurations, and other elements. Rather like the
Russian matryoshka dolls nested within each other, organizational subsystems are also sys-
tems with their own subsystems.23 For example, the Nordstrom department store in
Spokane, Washington, is a subsystem of the Nordstrom chain, but the Spokane store is also
a system with its own subsystems of departments, teams, and work processes. An organiza-
tions subsystems are interconnected so they interact to transform inputs into various
outputs. Some outputs (e.g., products, services, community support) may be valued by
the external environment, whereas other outputs (e.g., employee layoffs, pollution) are
by-products that may have adverse effects on the environment and the organizations rela-
tionship with that environment. Throughout this process, organizations receive feedback
from the external environment regarding the value of their outputs and the availability of
future inputs.
OrganizationEnvironment Fit According to the open systems perspective, orga-

nizations are effective when they maintain a good fit with their external environment.24
Good fit exists when the organization puts resources where they are most useful, so it can
adapt to and align with the needs of the external environment. For instance, Apple, Inc., has
a good fit with its many external environmentsjust look at the lines for new iPads and the
skyrocketing market share of Apple laptops and iPhones. In contrast, companies with a
poor fit with the environment offer the wrong products and operate inappropriately in their
environments.
Successful organizations maintain a good fit by anticipating changes in the environment
and fluidly reconfiguring their subsystems to become more consistent with that environ-
ment. To illustrate, food manufacturers have changed their ingredients and production
processes to satisfy more health- and environment-conscious consumers. Companies also
maintain a good fit by actively managing their external environment. For example, they
might try to limit competitor access to critical resources (e.g., gaining exclusive rights),
change consumer perceptions and needs (e.g., through marketing), or support legislation
that strengthens their position in the marketplace.
The third fit strategy is to move into different environments if the current environment
is too challenging. For instance, Nokia started in 1865 as a pulp and paper company. The
Finnish company entered the rubber and cable business in the 1920s, moved into electron-
ics in the 1960s, and began producing cell phones a decade later. These strategic choices
moved the company decisively into new external environments that seemed more appeal-
ing for Nokias long-term survival and success.25
Internal Subsystems Effectiveness The open systems perspective considers

more than an organizations fit with the external environment. It also defines
effectiveness by how well the company operates internally, that is, how well it trans-
forms inputs into outputs. The most common indicator of this internal transformation
process is organizational efficiency (also called productivity), which is the ratio of in-
puts to outcomes. 26 Companies that produce more
goods or services with less labor, materials, and energy
open systems organizational efficiency are more efficient.
A perspective which holds that The amount of outputs Successful organizations require more than efficient
organizations depend on the relative to inputs in the transformation processes, however. They also need to
external environment for organizations transformation
have more adaptive and innovative transformation pro-
resources, affect that process.
environment through their cesses.27 Brasilata illustrates both efficiency and innova-
output, and consist of internal tion in the transformation process. As we described in
subsystems that transform the opening story to this chapter, a continuous flow of
inputs to outputs. employee suggestions has made the Brazilian steel can
manufacturer highly efficient, which allows it to compete
better than less efficient companies. Many of these suggestions are also innovative, because
they identify new ways to manufacture cans, manage inventory, and market Brasilatas
products to businesses that buy these products.
One last observation about the open systems perspective is that coordination is vital in
the relationship among organizational subsystems, but this coordination is usually far from
ideal.28 Information gets lost, ideas are not shared, materials are hoarded, communication
messages are misinterpreted, resources and rewards are distributed unfairly, and so forth.
These coordination challenges are amplified as organizations grow, such as when employ-
ees are clustered into several departments and when departments are clustered into several
organizational divisions. A slight change in work practices in one subsystem may ripple
through the organization and undermine the effectiveness of other subsystems. For exam-
ple, a new accounting procedure in the financial subsystem might unintentionally reduce
the sales staff s motivation to sell products with higher profit margins.
ORGANIZATIONAL LEARNING PERSPECTIVE

The open systems perspective has traditionally focused on physical resources that enter the
organization and are processed into physical goods (outputs). This was representative of
the industrial economy but not the new economy, where the most valued input is knowl-
edge. The organizational learning perspective (also called knowledge management) views
knowledge as the main driver of competitive advantage. Specifically, organizational learn-
ing is founded on the idea that organizational effectiveness depends on the organizations
capacity to acquire, share, use, and store valuable knowledge.
Intellectual Capital: The Stock of Organizational Knowledge The orga-

nizational learning perspective views knowledge as a resource, and this stock of knowledge
exists in three forms, collectively known as intellectual capital.29 The most commonly
mentioned form of intellectual capital is human capitalthe knowledge, skills, and abili-
ties that employees carry around in their heads. Human capital has been described as valu-
able, rare, difficult to imitate, and nonsubstitutable.30 It is valuable because employees help
the organization discover opportunities and minimize threats in the external environment.
Human capital is rare and difficult to imitate, meaning that talented people are difficult to
find, and they cannot be cloned like sheep. Finally, human capital is nonsubstitutable be-
cause it cannot be easily replaced by technology.
Because of these characteristics, human capital is a competitive advantage as well as a
huge risk for most organizations. When key people leave, they take with them some of the
most valuable knowledge that makes the company effective. Innovation is the key to suc-
cess in this business, and creativity fuels innovation, explains Jim Goodnight, CEO of
SAS Institute, Inc., a leading statistical software developer in Cary, North Carolina. As such,
95 percent of my assets drive out the gate every evening. Its my job to maintain a work
environment that keeps those people coming back every morning. The creativity they bring
to SAS is a competitive advantage for us.31
Fortunately, some intellectual capital remains even if every employee did leave the orga-
nization. Structural capital (also called organizational capital) includes the knowledge
captured and retained in an organizations systems and structures, such as the docu-
mentation of work procedures and the physical layout of the production line.32
Structural capital also includes the organizations finished products, because knowledge
organizational learning can be extracted by taking them apart to discover how they work and are constructed
A perspective which holds that
(i.e., reverse engineering).
organizational effectiveness
depends on the organizations The third form of intellectual capital is relationship capital, which is the value de-
capacity to acquire, share, rived from an organizations relationships with customers, suppliers, and others who
use, and store valuable provide added mutual value for the organization. It includes the organizations good-
knowledge. will, brand image, and combination of relationships that organizational members have
with people outside the organization.33
EXHIBIT 1.2 Knowledge Sharing

Four Organizational Learning Communication
Training
Processes
Information systems
Observation
Knowledge Acquisition Knowledge Use

Individual learning Knowledge awareness
Environment scanning Sense making
Grafting Autonomy
Experimentation Empowerment
Knowledge Storage
Human memory
Documentation
Practices/habits
Databases
Organizational Learning Processes Organizations nurture their intellectual

capital through four organizational learning processes: knowledge acquisition, sharing, use,
and storage (see Exhibit 1.2).34
Knowledge acquisition. This includes extracting information and ideas from the ex-
ternal environment, as well as through insight. One of the fastest and most powerful
ways to acquire knowledge is by hiring individuals or acquiring entire companies
(called grafting). Knowledge also enters the organization when employees learn
from external sources. As Connections 1.1 describes, the Duha Group in Winnipeg,
Canada, acquires knowledge by sending staff on training programs and by touring
other companies to learn about their best practices. A third knowledge acquisition
strategy is experimentation. Companies receive knowledge through insight as a
result of research and other creative processes.
Knowledge sharing. This aspect of organizational learning involves distributing
knowledge to others across the organization. Knowledge sharing is often equated
with computer intranets and digital repositories of knowledge. These systems are
relevant, but knowledge sharing mainly occurs through structured and informal
communication, as well as various forms of learning (e.g., observation, experience,
training, practice). For example, Pixar Animation Studios deliberately centralized
its cafeteria, mailroom, and restroom facilities so employees would bump into and
coincidentally share knowledge with people from other areas of the organization
rather than just with their own team members.35
Knowledge use. The competitive advantage of knowledge comes from applying it in
ways that add value to the organization and its stakeholders. To do this, employees
must realize that the knowledge is available and that they have enough autonomy
toapply it. This requires the type of culture found at Brasilata, which supports the
intellectual capital human capital structural capital relationship capital

A companys stock of knowledge, The stock of knowledge, skills, Knowledge embedded in an The value derived from an
including human capital, and abilities among employees organizations systems and organizations relationships with
structural capital, and that provide economic value to structures. customers, suppliers, and other.
relationship capital. the organization.
connections 1.1
Duha Groups Learning
Organization Strategies36
Nestled away in an industrial section of Winnipeg, Canada, is
Duha Group, a role model for the learning organization. The
global manufacturer, marketer, and supplier of paint fandecks
(color cards) and color samples depends on lean manufactur-
ing for its quality and efficiency, and organizational learning
practices enable it to continuously raise these standards.
Duhas 290 Winnipeg employees (the company also has plants
in New York, Mexico, Europe, Asia, and Australia) acquire ex-
ternal knowledge by touring other companies to learn about
their best practices. Knowledge is also brought in through Duha Group applies organizational learning through
company-supported formal off-site training (such as health and Kaizen Blitzes, off-site training, lunch-and-learn sessions,
safety officer training at a nearby college). In addition, Duha and daily huddles.
employees are encouraged to discover new knowledge
through experimentation within their work area and through
Kaizen Blitzes (where teams identify more effective ways to op-
erate entire work areas). We are encouraged to give our ideas huddles, held every day for five minutes. Employees congre-
a try even if they fail, says a Duha employee. Its rewarding to gate around a huddle board where they post suggestions for
apply new concepts that add value or improvement. improvement, describe work process changes in their area,
Duha Group employees engage in knowledge sharing and hear about company news. The huddles are a great idea,
through formal in-house training programs, mentoring arrange- says a Duha employee. I think thats one of our best outlets for
ments, and informal hands-on training sessions. Also, detailed communication.
company operating manuals and other documents are cen- Finally, Duha Group encourages employees to put knowl-
trally located with access to all staff. A popular form of knowledge to use by giving them plenty of autonomy and support.
edge sharing is Duha Groups lunch-and-learn sessions, where Indeed, every employee has a learning plan they review with
employees teach coworkers about lean management, specific management as well as a learning journal to maintain their fo-
production practices, health and safety, environmental, quality, cus on continuous learning. Knowledge use also occurs more
and human resources while enjoying a hot, company-supplied readily because the huddle boards in each department show,
meal. Knowledge sharing also occurs through departmental who has specific knowledge they might require.
learning process by encouraging experimentation and open communications and

recognizing that mistakes are part of that process.
Knowledge storage. Knowledge storage includes any means by which knowledge is
held for later retrieval. It is the process that creates organizational memory. Human
memory plays a critical role here, as do the many forms of documentation and data-
base systems that exist in organizations. Individual practices and habits hold less
explicit (more tacit) knowledge.
Absorptive Capacity An important prerequisite for acquiring, sharing, and using

new knowledge is the amount and quality of knowledge already held within the organiza-
tion. Just as students need to learn knowledge in core courses before they can understand
content in more advanced courses, companies need to have employees with a sufficient
foundation of expertise to receive and apply new knowledge. This knowledge prerequisite
is known as the organizations absorptive capacity.37 For example, many companies were
slow to develop online marketing practices because no one in the organization had enough
knowledge about the Internet to fathom its potential or apply that knowledge to the com-
panys business. In some cases, companies had to acquire entire teams of people with the
requisite knowledge to realize the potential of this marketing channel.
Organizational Memory and Unlearning Corporate leaders need to recognize

that they are the keepers of organizational memory.38 This unusual metaphor refers to the
storage and preservation of intellectual capital. It includes knowledge that employees pos-
sess, as well as knowledge embedded in the organizations systems and structures. It in-
cludes documents, objects, and anything else that provides meaningful information about
how the organization should operate.
How do organizations retain intellectual capital? One way is by keeping knowledgeable
employees. Progressive companies achieve this by adapting their employment practices to
become more compatible with emerging workforce expectations. A second organizational
memory strategy is to systematically transfer knowledge to other employees. This occurs
when newcomers apprentice with skilled employees, thereby acquiring knowledge that is
not documented. A third strategy is to transfer knowledge into structural capital. This in-
cludes bringing out hidden knowledge, organizing it, and putting it in a form that can be
available to others. Reliance Industries, Indias largest business enterprise, applies this strat-
egy by encouraging employees to document their successes and failures through a special
intranet knowledge portal. One of these reports provided information that later prevented
a costly plant shutdown.39
The organizational learning perspective states not only that effective organizations learn
but also that they unlearn routines and patterns of behavior that are no longer appropri-
ate.40 Unlearning removes knowledge that no longer adds value and, in fact, may under-
mine the organizations effectiveness. Some forms of unlearning involve replacing
dysfunctional policies, procedures, and routines. Other forms of unlearning erase attitudes,
beliefs, and assumptions. For instance, employees rethink the best way to perform a task
and how to serve clients. Organizational unlearning is particularly important for organiza-
tional change, which we discuss in Chapter 15.
HIGH-PERFORMANCE WORK PRACTICES

(HPWP) PERSPECTIVE
The open systems perspective states that successful companies are good at transforming
inputs into outputs. However, it does not identify the subsystem characteristics that distin-
guish effective organizations from others. Consequently, an entire field of research has
blossomed around the objective of discovering the best bundle of organizational practices
that offers competitive advantage. This research has had various labels over the years, but it
is now most commonly known as high-performance work practices (HPWP).41
Similar to organizational learning, the HPWP perspective is founded on the belief that
human capitalthe knowledge, skills, and abilities that employees carry around in their
headsis an important source of competitive advantage for organizations.42 The distinctive
feature of the HPWP perspective is that it tries to identify a specific bundle of systems and
structures that generate the most value from this human capital.
Researchers have investigated numerous potential high-performance work practices, but
we will focus on four that are recognized in most studies.43 Two of these are employee involve-
ment and job autonomy. Both activities tend to strengthen employee motivation as well as
improve decision making, organizational responsiveness, and commitment to change. In
high-performance workplaces, employee involvement and job autonomy often take the form
of self-directed teams (see Chapter 8).
Another key variable in the HPWP model is employee competence. Specifically, or-
ganizations are more effective when they recruit and select people with relevant skills,
knowledge, values, and other personal characteristics.
Furthermore, successful companies invest in employee
absorptive capacity high-performance work
development through training and development. A
The ability to recognize the practices (HPWP)
value of new information, A perspective which holds
fourth characteristic of high-performance organizations
assimilate it, and use it for that effective organizations is that they link performance and skill development to
value-added activities. incorporate several workplace various forms of financial and nonfinancial rewards
practices that leverage the valued by employees. Each of these four work practices
potential of human capital. involvement, autonomy, employee competence, and per-
formance/skill-based rewardsindividually improves
American Express has taken a organizational performance, but recent

page from the high-performance evidence suggests that they have a stron-
work practices playbook. The ger effect when bundled together.44
financial services company Why are HPWP associated with orga-
encourages employees to go nizational effectiveness? Early studies
off script, meaning that they were criticized for ignoring this ques-
have the autonomy to customize tion,46 but OB experts are now building
their conversations rather than and testing more theoretical explana-
rely on memorized statements. tions.47 The first reason is that HPWP
Employees also have the build human capital, which improves
discretion to solve problems performance as employees develop the
on the spot, such as setting up skills and knowledge to perform the work.
a conference call to settle a A second explanation is that superior
dispute with a vendor. We are human capital may improve the organiza-
getting more and more power tions adaptability to rapidly changing
to make the decisions at our environments. Employees respond better
level, says Teresa Tate, an when they have a wide skill set to handle
American Express customer diverse tasks as well as the confidence to
service employee in Phoenix.45 handle unfamiliar situations. A third ex-
planation for why HPWP improve orga-
nizational effectiveness is that these
activities strengthen employees motiva-
tion and attitudes toward the employer.
For instance, HPWP represent the com-
panys investment in and recognition of its workforce, which motivates employees to recip-
rocate through greater effort in their jobs and assistance to coworkers.
The HPWP perspective is still developing, but it already reveals important informa-
tion about specific organizational practices that improve the inputoutput transforma-
tion process. Still, this perspective has been criticized for focusing on shareholder and
customer needs at the expense of employee well-being.48 This concern illustrates that
the HPWP perspective offers an incomplete picture of organizational effectiveness. The
remaining gaps are mostly filled by the stakeholder perspective of organizational
effectiveness.
STAKEHOLDER PERSPECTIVE
The three organizational effectiveness perspectives described so far mainly pay attention
to processes and resources, yet they only minimally recognize the importance of rela-
tions with stakeholders. Stakeholders include anyone with a stake in the company
employees, stockholders, suppliers, labor unions, government, communities, consumer
and environmental interest groups, and so on (see Exhibit 1.3). In other words, organiza-
tions are more effective when they consider the needs and expectations of any individual
group or other entity that affects, or is affected by, the organizations objectives and
actions. This approach requires organizational leaders and employees to understand,
manage, and satisfy the interests of their stakeholders.49 The stakeholder perspective
personalizes the open systems perspective; it identifies specific people and social entities
in the external environment as well as within the organization (the internal environ-
ment). It also recognizes that stakeholder relations are dynamic; they can be negotiated
and managed, not just taken as a fixed condition.50
Consider the troubles that Walmart has faced in recent years.51 For decades, the
worlds largest retailer concentrated on customers by providing the lowest possible
prices and on stockholders by generating healthy financial returns. Yet emphasizing
these two stakeholders exposed the company to increasing hostility from other groups
in society. Some accused Walmart of destroying Americas manufacturing base and
EXHIBIT 1.3
Organizational Stakeholders Customers
Employees Stockholders
Governments Labor Unions
Organization
Special
Joint Venture
Interest
Partners
Groups
Communities
Suppliers
and Charities
Note: This exhibit does not show the complete set of possible stakeholders.
ignoring unethical business practices (such as child labor) in countries where it

purchased goods. Others pointed out that Walmart had a poor record of environmental
and social responsibility. These stakeholder pressure points existed for some time, but
Walmart ignored most of them until they became serious threats. In fact, Walmart
recently created the position senior director of stakeholder engagement to ensure
that it pays more attention to most stakeholders and to proactively manage those
relationships.
Understanding, managing, and satisfying the interests of stakeholders is more challeng-
ing than it sounds because stakeholders have conflicting interests, and organizations dont
have the resources to satisfy every stakeholder to the fullest. Therefore, organizational lead-
ers need to decide how much priority to give to each group. One commonly cited factor is
to favor stakeholders with the most power.52 This makes sense when one considers that the
most powerful stakeholders present the greatest threat and opportunity to the companys
survival. Yet stakeholder power should not be the only factor to consider. Ignoring less
powerful stakeholders might motivate them to form coalitions or seek government sup-
port, which would give them more power. Ignoring smaller stakeholders might also irritate
the more powerful stakeholders if ignoring weaker interests violates the norms and stan-
dards of society.
Values, Ethics, and Corporate Social Respon-

stakeholders values
sibility This brings us to one of the key strengths of
Individuals, organizations, or Relatively stable, evaluative
other entities that affect, or are beliefs that guide a persons
the stakeholder perspective, namely, that it incorporates
affected by, the organizations preferences for outcomes or values, ethics, and corporate social responsibility into
objectives and actions. courses of action in a variety the organizational effectiveness equation.53 The stake-
of situations. holder perspective states that to manage the interests of
diverse stakeholders, leaders ultimately need to rely on
their personal and organizational values for guidance. Values are relatively stable, evalu-
ative beliefs that guide our preferences for outcomes or courses of action in a variety of
situations.54 Values help us know what is right or wrong, or good or bad, in the world.
Chapter 2 explains how values anchor our thoughts and to some extent motivate our
actions. Although values exist within individuals, groups of people often hold similar
values, so we tend to ascribe these shared values to the team, department, organization,
profession, or entire society. For example, Chapter 14 discusses the importance and
dynamics of organizational culture, which includes shared values across the company or
within subsystems.
Many companies have adopted the values-driven organization model, whereby
employee decisions and behavior are guided by the companys espoused values rather
than by expensive and often demoralizing command-and-control management (i.e.,
top-down decisions with close supervision of employees).55 Tony Hsieh, CEO of the
online retailer Zappos, discovered the importance of clarifying the companys values
when someone suggested that managers need these values to help them make better
hiring decisions. After considerable reflection and involvement from staff, Hsieh
e-mailed employees with 10 values. In that e-mail, Hsieh also wrote: Ideally, we want
all 10 values to be reflected in everything we do, including how we interact with each
other, how we interact with our customers, and how we interact with our vendors and
business partners.56
By linking values to organizational effectiveness, the stakeholder perspective also in-
corporates ethics and corporate social responsibility into the organizational effective-
ness equation. In fact, the stakeholder perspective emerged out of earlier writing on
ethics and corporate social responsibility. Ethics refers to the study of moral principles
or values that determine whether actions are right or wrong and outcomes are good or
bad. We rely on our ethical values to determine the right thing to do. Ethical behavior
is driven by the moral principles we use to make decisions. These moral principles
represent fundamental values. In a recent global survey of MBA students, almost 80per-
cent felt that a well-run company operates according to its values and code of ethics.57
Chapter 2 provides more detail about ethical principles and related influences on moral
reasoning.
Corporate social responsibility (CSR) consists of organizational activities intended
to benefit society and the environment beyond the firms immediate financial interests or
legal obligations.58 It is the view that companies have a contract with society, in which
they must serve stakeholders beyond stockholders and customers. In some situations, the
interests of the firms stockholders should be secondary to those of other stakeholders.59
As part of CSR, many companies have adopted the triple bottom line philosophy: They
try to support or earn positive returns in the economic, social, and environmental
spheres of sustainability. Firms that adopt the triple bottom line aim to survive and be
profitable in the marketplace (economic), but they also intend to maintain or improve
conditions for society (social) as well as the physical environment.60 Companies are par-
ticularly eager to become greener, that is, to minimize their negative effects on the
physical environment. This activity ranges from reducing and recycling waste in the pro-
duction process to using goats to mow the lawn (which is one of the many environmental
initiatives at Google).
Not everyone agrees that organizations need to cater to a wide variety of stake-
holders. More than 30 years ago, the economist Milton Friedman pronounced, There
is one and only one social responsibility of businessto use its resources and engage
in activities designed to increase its profits.61 Although few writers take this extreme
view today, some point out that companies cannot benefit stakeholders unless stock-
holders receive first priority. But even this position is unpopular with most employees
and other stakeholders. Our companys position on corporate social responsibility
and the environment is a significant part of what job candidates find attractive
about HBC, acknowledges a senior executive at Hudsons Bay Co., the Canadian
departmentstore chain and oldest commercial business in North America.62 In short,
MTN Group is the largest mobile (cell phone) telecommunications company in Africa and a leader in corporate social responsibility
(CSR). Through its award-winning 21 Days of Yello Care program, most of the companys 30,000 employees volunteer for specific
CSR events held over three weeks each year. This photo shows MTN employees in Uganda participating in a recent Yello Care
initiativeplanting at least 1,000 trees in each of the 21 African and Middle Eastern countries where MTN does business. Yello
Care themes in previous years included fighting against malaria, reducing traffic accidents, cleaning up the community, and
supporting orphanages.63
Courtesy of MTN.
leaders may put their organization at risk if they ignore their broader corporate social
responsibility.
Capgemini executives knew that CSR was important, but it really struck home when
the Netherlands-based information technology (IT) consulting firm tried to fill 800 IT and
management consulting positions. Rather than offering a t-shirt for completing the
30-minute online survey on recruitment issues, Capgemini advised respondents (IT and
management consultants) that for each completed survey it would provide funding for a
street kid in Kolkata, India, to have one week of schooling and accommodation. The sur-
vey included an option for respondents to find out more about employment with the con-
sulting firm. Far beyond its expectations, Capgemini
received 10,000 completed surveys and 2,000 job inqui-
ethics corporate social ries from qualified respondents. The company filled its
The study of moral principles responsibility (CSR)
800 jobs and developed a waiting list of future pros-
or values that determine Organizational activities
whether actions are right or intended to benefit society and
pects. Furthermore, media attention about this initiative
wrong and outcomes are good the environment beyond the raised Capgeminis brand reputation for corporate social
or bad. firms immediate financial responsibility. The consulting firm also supported
interests or legal obligations. 10,400 weeks of housing and education for children in
Kolkata.64
High Expectations for Corporate CONNECTING THE DOTS:

ORGANIZATIONAL
Social Responsibility EFFECTIVENESS AND
ORGANIZATIONAL BEHAVIOR
87% ofto employees worldwide who are more likely to want
work for a company that is considered ethically and
These four perspectives of organizational effec-
tivenessopen systems, organizational learning,
socially responsible.
high-performance work practices, and stakeholders
57% reputation for social responsibility is a factor in retaining provide

of employees worldwide who say their company's a roadmap to guide thesurvival and success
of organizations. They also provide a central source
them as employees.
of links to the topics discussed throughout this
54 % of employees worldwide who say their company makes

environmentally responsible decisions.
book. The adaptive emphasis of the open systems
perspective connects directly to leadership (Chap-
ter 12) and organizational change (Chapter 15). The
51 % moreof UK employees who believe their employer should do
to encourage charitable acts and corporate social transformation process aspect of open systems
responsibility. relates to job design (Chapter 6), organizational
structure (Chapter 13), and relations between sub-
36 % long-term
of American and European MBA students who listed
viability in the marketplace as one of the top units in terms of conflict (Chapter 11) and power
three benefits when companies fulfill their social and influence (Chapter 10).
responsibilities. The organizational learning perspective high-
lights the importance of communication (Chapter 9)
26% theof American and European MBA students who selected
contribution to make a contribution to society as as well as creativity, employee involvement, and
one of the top three factors in selecting a job. topics in decision making (Chapter 8). The high-
performance work practices perspective of effec-
15 % of UK employees who would take a significant pay cut
to work for a company that has the right attitude tiveness directly casts a spotlight on team dynamics
towards charities and corporate social responsibility. (Chapter 8), employee motivation (Chapter 5), re-
wards (Chapter 6), and most individual-level topics
(Chapter 2 to Chapter 4). The stakeholder approach has direct relevance to values and
ethics (Chapter 2), organizational culture (Chapter 14), and decision making (Chapter 7).
Contemporary Challenges for Organizations

A message threaded throughout the previous section on organizational effectiveness is that
LO3 organizations are deeply affected by the external environment. Consequently, they need to
anticipate and adjust to environment changes to maintain a good organizationenvironment
fit. The external environment is continuously changing, but some changes over the past
decade and in the decade to come are more profound than others. These changes require
corporate leaders and all other employees to make personal and organizational adjustments.
In this section, we highlight three major challenges facing organizations: globalization,
increasing workforce diversity, and emerging employment relationships.
GLOBALIZATION
PricewaterhouseCoopers LLP recently sent Maja Baiocco on a two-year international as-
signment in Zurich. For Baiocco, an asset management auditor in the accounting firms
office in Toronto, Canada, it was a welcome chance to gain global experience and boost her
career. This company (PwC) is global and opportunities are global, and I know that inter-
national experiences are important to expand my experience and open new opportunities
for advancement, she says.66 Maja Baiocco is developing her career in a world of increasing
globalization. Globalization refers to economic, social, and cultural connectivity with peo-
ple in other parts of the world. Organizations globalize when they actively participate in
other countries and cultures. Although businesses have traded goods across borders for
centuries, the degree of globalization today is unprecedented. Information technology and
transportation systems allow a much more intense level of connectivity and interdepen-
dence around the planet.67
Learning how to use chopsticks

might not be the most important
item in cross-cultural training.
But it is one of the skills that
Millennium: The Takeda
Oncology Co. is teaching its
managers in Cambridge, Mass.,
as part of a class on Japanese
customs. The Japanese-owned
biotechnology firm, which
employs 1,300 people in the
United States, encourages its
employees to develop global
knowledge and skills.70
Boston Globe/Barry Chin.
Globalization offers numerous benefits to organizations in terms of larger markets,

lower costs, and greater access to knowledge and innovation. At the same time, there is
considerable debate about whether globalization benefits developing nations, and whether
it is primarily responsible for increasing work intensification, as well as reducing job secu-
rity and worklife balance in developed countries.68 Globalization is now well entrenched,
so the most important issue in organizational behavior is how corporate leaders and
employees alike can lead and work effectively in this emerging reality.69
Throughout this book, we will refer to the effects of globalization on teamwork, diver-
sity, cultural values, organizational structure, leadership, and other themes. Each topic
highlights that globalization has brought more complexity to the workplace, but also more
opportunities and potential benefits for individuals and organizations. Globalization re-
quires additional knowledge and skills that we will also discuss in this book, such as emo-
tional intelligence, a global mindset, nonverbal communication, and conflict handling.
INCREASING WORKFORCE DIVERSITY

Walk into the offices of Verizon Communications, and you can quickly see that the telecom-
munications giant values workforce diversity. Women and people of color constitute nearly
60 percent of the companys 195,000-person workforce and nearly half of the companys
board of directors. African Americans represent 20 percent of Verizons workforce (com-
pared with 11 percent of the U.S. labor force). More than one-quarter of senior management
(vice president and above) positions are held by women. The company also actively supports
diversity among its many suppliers. Verizons inclusive culture has won awards from numer-
ous organizations and publications representing Hispanic, African American, gay/lesbian,
people with disabilities, and other groups. Verizon incorporates diversity in all that we do,
says CEO Ivan Seidenberg. Its part of our credo to encourage each other to embrace diver-
sity and personal development, not only because its the
right thing to do but also because its smart business.71
globalization surface-level diversity
Verizon Communications is a model employer and a
Economic, social, and cultural The observable demographic
connectivity with people in or physiological differences in reflection of the increasing diversity of people living in
other parts of the world. people, such as their race, the United States and in many other countries. The de-
ethnicity, gender, age, and scription of Verizons diversity refers to surface-level
physical disabilities. diversitythe observable demographic and other overt
differences in people, such as their race, ethnicity, gender,
EXHIBIT 1.4
Americas Multigenerational
Workforce75 Baby
Boomers
37%
Generation X
28%
Silents 6%
3%
Generation Z Millennials
(Gen Y)
26%
Percentage of United States workforce by age group, based on 2009 data from the U.S.
Bureau of Labor Statistics. Silents represent the generation of employees born before
1946. Generation-Z employees were born after 1990, though some sources consider this
group part of Millennials.
age, and physical capabilities. Surface-level diversity has changed considerably in the United
States over the past few decades. People of non-Caucasian or Hispanic origins represent one-
third of the American population, and this is projected to increase substantially over the next
few decades. Within the next 50 years, one in four Americans will be Hispanic, 14 percent will
be African American, and 8 percent will be of Asian descent. By 2060, people with European
non-Hispanic ethnicity will be a minority.72 Many other countries are also experiencing in-
creasing levels of racial and ethnic diversification.
Diversity also includes differences in the psychological characteristics of employees, in-
cluding personalities, beliefs, values, and attitudes.73 We cant directly see this deep-level
diversity, but it is evident in a persons decisions, statements, and actions. A popular example
is the apparent deep-level diversity across generations.74 Exhibit 1.4 illustrates the distribu-
tion of the American workforce by major generational cohort: 37 percent Baby Boomers
(born between 1946 and 1964), 28 percent Generation X (born from 1965 to 1980), and 26 per-
cent Millennials (also called Generation Y, born after 1980).
Do these generational cohorts have different attitudes and expectations, particularly re-
garding work? The answer is a qualified yes. Differences exist, but some are smaller than
depicted in the popular press, and some of these differences are due to age, not cohort (i.e.,
Boomers had many of the same attitudes as Millennials when they were that age).76 One
recent investigation of 23,000 undergraduate college students reported that Millennials ex-
pect rapid career advancement regarding promotions and pay increases.77 These observa-
tions are consistent with other studies, which have found that Millennials are more
self-confident and more narcissistic (self-centered) and have less work centrality (i.e., work
is less of a central life interest) when compared with Boomers. Generation-X employees
typically average somewhere between these two cohorts.78
One high-quality study, which compared attitudes of senior U.S. high school stu-
dents in 1976 (Boomers), 1991 (Gen-Xers), and 2006 (Millennials), reported that Gen-
Xers prefer leisure significantly more than do Boomers, and Millennials prefer leisure
significantly more than do Gen-Xers.79 This longitudinal cohort study also revealed
that Millennials and Gen-Xers value extrinsic rewards significantly more than do
Boomers, Millennials value intrinsic motivation significantly less than do Boomers, and
Millennials value social interaction significantly less than do Boomers or Gen-Xers.
Ofcourse, these results dont apply to everyone in each cohort, but they do suggest that
deep-level diversity exists across generations.
Consequences of Diversity Diversity presents both opportunities and challenges

in organizations.80 Diversity is an advantage because it provides a broader spectrum of
knowledge. Furthermore, teams with some forms of diversity (particularly occupational
diversity) make better decisions on complex problems than do teams whose members have
similar backgrounds. There is also some evidence that companies that have won diversity
awards have higher financial returns, at least in the short run.81 This is consistent with an-
ecdotal evidence from many corporate leaders, namely, that having a diverse workforce
improves customer service and creativity. As a company serving customers around the
globe, we greatly value the diverse opinions and experiences that an inclusive and diverse
workforce brings to the table, says Magda Yrizarry, Verizons chief diversity officer and
vice president for talent management.82
This information supports the popular refrain that workforce diversity is a sound busi-
ness proposition. Unfortunately, its not that simple. Most forms of diversity offer both ad-
vantages and disadvantages.83 Teams with diverse employees usually take longer to perform
effectively. Diversity brings numerous communication problems as well as fault lines in
informal group dynamics. Diversity is also a source of conflict, which can lead to lack of
information sharing and, in extreme cases, morale problems and higher turnover.
Whether or not workforce diversity is a business advantage, companies need to make it
a priority because surface-level diversity is a moral and legal imperative. Ethically, compa-
nies that offer an inclusive workplace are, in essence, making fair and just decisions regard-
ing employment, promotions, rewards, and so on. Fairness is a well-established influence
on employee loyalty and satisfaction. Diversity is about fairness; we use the term inclusive
meritocracy, says a Bank of America New Jersey executive. What it does for our work-
force is build trust and assures that individual differences are valued.84 In summary, workforce
diversity is the new reality and organizations need to adjust to this reality both to survive
and to experience its potential benefits for organizational success.
EMERGING EMPLOYMENT RELATIONSHIPS

Combine globalization with emerging workforce diversity; then add in recent develop-
ments in information technology. The resulting concoction has created incredible changes
in employment relationships. A few decades ago, most (although not all) employees in the
United States and similar cultures would finish their workday after eight or nine hours and
could separate their personal time from the workday. There were no iPhones, Blackberrys,
or Internet connections to keep them tethered to work on a 24/7 schedule. Even business
travel was more of an exception due to its high cost. Most competitors were located in the same
country, so they had similar work practices and labor costs. Today, work hours are longer
(although arguably less than 100 years ago), employees experience more work-related stress, and
there is growing evidence that family and personal relations are suffering.
Little wonder that one of the most important employment issues over the past decade has
been worklife balance. Worklife balance occurs when people are able to minimize conflict
between their work and nonwork demands.85 Most employees lack this balance because they
spend too many hours each week performing or thinking about their job, whether at the
workplace, at home, or on vacation. This focus on work leaves too little time to fulfill non-
work needs and obligations. Our discussion of work-related stress (Chapter 4) will examine
worklife balance issues in
deep-level diversity worklife balance virtual work
more detail.
Differences in the psychological The degree to which a person Work performed away from the Another employment re-
characteristics of employees, minimizes conflict between traditional physical workplace by lationship trend is virtual
including personalities, beliefs, work and nonwork demands. using information technology. work, whereby employees
values, and attitudes. use information technology
to perform their jobs away
A few years ago, Chris Keehn

had a three-hour round trip
commute between his home
and office at Deloitte LLC in
downtown Chicago. Most days,
his young daughter would be
asleep when he left in the
morning and when he returned
home at night. The senior tax
accountant got his life back by
becoming a teleworker four days
each week. Working from home
now gives Keehn more time to
take his daughter to school and
attend her evening basketball
games. Keehn even found that
he communicates more often
with his team. I actually talk to
them more now, he says.87
from the traditional physical workplace. Some virtual work occurs when employees are con-
nected to the office while traveling or at clients offices. However, the most common form in-
volves working at home rather than commuting to the office (often called telecommuting or
teleworking). Estimates of the number of teleworkers vary from one survey to the next. One
estimate is that the number of American employees who work from home at least one day per
month has increased from 7.6 million in 2004 to well above 17 million today. This figure will
increase substantially over the next few years because the U.S. federal governments new tele-
work legislation requires departments to establish policies and practices that encourage more
government employees to work from home one or more days per week.86
Telework is already well established in several companies. More than two-thirds of the
employees at Agilent Technologies work from home or off-site some or all of the time.
Employees at Cisco Systems, the Internet technology company, work from home an average
of two days per week. Deloitte LLP has had a telework program for the past 15 years. More
than 80 percent of the professional services and accounting firms 45,000 American em-
ployees currently work remotely for at least 20 percent of the workweek.88
The benefits and risks of virtual work, particularly working from home, have received
much study and debate. The evidence suggests that telework attracts job applicants as well as
improves the employees worklife balance (which reduces stress) and productivity.89 One
recent study of 25,000 IBM employees found that employees who worked at home most of
the time could perform 50 hours of work per week before experiencing worklife conflict
compared to 46 hours per week for those who worked only at the office. Female telecom-
muters with children were able to work 40 hours per week, whereas non-telecommuters
could only manage 30 hours before feeling worklife balance tension.
Telework also offers environmental benefits. Cisco Systems estimates that tele-
commuting among its employees worldwide avoids almost 50,000 metric tons of green-
evidence-based management house gas emission and saves employees $10 million in fuel costs each year. Deloitte
The practice of making saved $30 million in one year due to the reduced office space requirements as more
decisions and taking actions employees worked part of the week from home. Productivity also usually improves
based on research evidence. with telework in place. One study found that employees allocate 60 percent of the time
they would have been commuting to work and use the other 40 percent of that time for
personal activities. When a major blizzard shut federal government offices in Washington,
DC, 30 percent of employees teleworked, saving the government $30million per day.90
Against these potential benefits, work-at-home employees face a number of real or
potential challenges. Family relations may suffer rather than improve if employees lack
sufficient space and resources for a home office. Some employees complain of social isola-
tion and reduced promotion opportunities when they work away from the office most of
the time. Telework is clearly better suited to people who are self-motivated and organized,
can work effectively with broadband and other technology, and have sufficient fulfillment
of social needs elsewhere in their life. They tend to be the kind of people who would stay
late and do the job at the office, people who know what theyre responsible for and want to
get it done, says Michelle van Schouwen, president of van Schouwen Associates, an adver-
tising and marketing firm in Longmeadow, Mass.91 Virtual work arrangements are also
more successful in organizations that evaluate employees by their performance outcomes
rather than face time.92
Anchors of Organizational Behavior Knowledge

Globalization, increasing workforce diversity, and emerging employment relationships
LO4 are just a few of the trends that challenge organizations and make the field of organiza-
tional behavior more relevant than ever before. To understand these and other topics, the
field of organizational behavior relies on a set of basic beliefs or knowledge structures
(see Exhibit 1.5). These conceptual anchors represent the principles on which OB knowl-
edge is developed and refined.93
THE SYSTEMATIC RESEARCH ANCHOR

A key feature of OB knowledge is that it should be based on systematic research, which
typically involves forming research questions, systematically collecting data, and testing
hypotheses against those data.94 Appendix A at the end of this book provides a brief over-
view of these research methods. Systematic research investigation produces evidence-
based management, which involves making decisions and taking actions based on this
research evidence. It makes perfect sense, doesnt it, that management practice should be
founded on the best available systematic knowledge? Yet many of us who study organiza-
tions using systematic methods are amazed at how often corporate leaders embrace fads,
consulting models, and their own pet beliefs without bothering to find out if they actu-
ally work!95
There are many reasons people have difficulty applying evidence-based management.
Leaders and other decision makers are bombarded with so many ideas from newspapers,
EXHIBIT 1.5 Systematic research OB should study organizations using

anchor systematic research methods
Anchors of Organizational
Behavior Knowledge
Multidisciplinary OB should import knowledge from other
anchor disciplines, not just create its own knowledge
Contingency OB theory should recognize that the effects

anchor of actions often vary with the situation
Multiple levels of OB events should be understood from three levels

analysis anchor of analysis: individual, team, and organization
Debating Point
IS THERE ENOUGH EVIDENCE TO SUPPORT EVIDENCE-BASED MANAGEMENT?
One of the core anchors of organizational behavior is that knowl- Another concern is that managers seldom view organiza-
edge must be built on a solid foundation of scientifically based tional research as sufficiently relevant to the issues they face.97
research. This evidence-based management (EBM) approach This bias partly occurs because scholarly journal reviewers usu-
particularly embraces scientific methodsrelevant measures, ally accept only studies with uncontaminated, quantifiable mea-
appropriate sampling, systematic experimental design, and the sures in environments that control for other factors. But
likebecause they produce more valid theories to guide man- managers do not operate in these pristine conditions. Their world
agement decisions. Scholars also advise that managers need to is much more complex, with vague estimates of key variables.
become more aware of these well-studied cause-and-effect prin- One indicator of this researchpractice gap is that managers
ciples, be sensitive to the conditions when applying these EBM typically require knowledge of specific interventions, yet only
principles, and use diagnostic tools (e.g., surveys, checklists) to about 2 percent of organizational studies conduct real-world
guide their application to the workplace. Invariably, supporters interventions.98 Most published studies analyze data from self-
of the evidence-based management movement contrast this reported questionnaires.
systematic approach with reliance on management fads, hyped A third critique of the EBM movement is that the systematic
consulting, and untested personal mental models. elements of organizational research studies (e.g., sample size,
It seems obvious that we should rely on good evidence rather measurement reliability, advanced data analysis methods) some-
than bad evidence (or no evidence at all) to make sound deci- times mask other potentially serious faults. Cross-cultural stud-
sions in the workplace. Yet, there is another side to this debate.96 ies, for instance, often use college student samples to represent
The question isnt whether good evidence is valuable; it is about an entire culture. Lab studies with students assume they repli-
the meaning of good evidence. One concern is that scholars cate workplace conditions without recognizing that the sample
might be advocating an interpretation of good evidence that is far (students versus employees), setting (lab versus workplace), and
too narrow. They typically limit evidence to empirical research activity studied are considerably different. Indeed, some meta-
and consider qualitative information anecdotal. Albert Einstein analyses report substantially different results from studies using
tried to avoid this questionable view by keeping the following students versus employees. Finally, even if the published
message framed on his wall: Not everything that can be counted research is valid, it is usually biased because research with
counts, and not everything that counts can be counted. nonsignificant results is much less likely to be published.
books, consultant reports, and other sources that it is a challenge to figure out which ones
are based on good evidence. Another problem is that good OB research is necessarily
generic; it is rarely described in the context of a specific problem in a specific organization.
Managers therefore have the difficult task of figuring out which theories are relevant to
their unique situation.
A third reason organizational leaders accept fads and other knowledge that lacks suf-
ficient evidence is that consultants and popular book writers are rewarded for marketing
their concepts and theories, not for testing to see if they actually work. Indeed, some man-
agement concepts have become popularthey are even found in some OB textbooks!
because of heavy marketing, not because of any evidence that they are valid. Finally, as we
will learn in Chapter 3, people form perceptions and beliefs quickly and tend to ignore
evidence that their beliefs are inaccurate. To counter these opposing forces, OB experts
have proposed a few simple suggestions to create a more evidence-based organization
(see Exhibit 1.6).
THE MULTIDISCIPLINARY ANCHOR

Organizational behavior is anchored around the idea that the field should welcome theories
and knowledge in other disciplines, not just from its own isolated research base. For in-
stance, psychological research has aided our understanding of individual and interpersonal
behavior. Sociologists have contributed to our knowledge of team dynamics, organizational
EXHIBIT 1.6 1. Stop treating old ideas as if they were brand new.
2. Be suspicious of breakthrough ideas and studies.
Creating an Evidence-Based 3. Celebrate and develop collective brilliance.
Management Organization 4. Emphasize drawbacks as well as virtues.
5. Use success (and failure) stories to illustrate sound practices, but not in place of a valid
research method.
6. Adopt a neutral stance toward ideologies and theories.
Source: J. Pfeffer and R. I. Sutton, Evidence-Based Management, Harvard Business Review 84, no. 1 (2006),
pp. 6274.
socialization, organizational power, and other aspects of the social system. OB knowledge
has also benefited from knowledge in emerging fields such as communications, marketing,
and information systems. Borrowing from other disciplines is inevitable. Organizations
have central roles in society, so they are the subject of many social sciences. Furthermore,
organizations consist of people who interact with one another, so there is an inherent inter-
section between OB and most disciplines that study human beings.
Borrowing theories from other disciplines has helped the field of OB nurture a diversity
of knowledge and perspectives about organizations, but there are a few concerns.99 One
issue is whether OB suffers from a trade deficitimporting far more knowledge from
other disciplines than it exports to other disciplines. By relying on theories developed in
other fields, OB knowledge necessarily lags rather than leads in knowledge production. In
contrast, OB-bred theories allow researchers to concentrate on the quality and usefulness of
the theory.
Heavy reliance on theories borrowed from other disciplines may also leave OB
vulnerable to a lack of common identity. The field could potentially become a place for
researchers who are raised in and mainly identify with the other disciplines (psychology,
sociology, and so on) rather than with organizational behavior. The lack of identification as
an OB scholar might further challenge the fields ability to develop its own theory and
weaken its focus on practical relevance.
THE CONTINGENCY ANCHOR

People and their work environments are complex, and the field of organizational behavior
recognizes this by stating that a particular action may have different consequences in differ-
ent situations. In other words, no single solution is best all of the time.100 Of course, it
would be so much simpler if we could rely on one best way theories, in which a particular
concept or practice has the same results in every situation. OB experts do search for simpler
theories, but they also remain skeptical about surefire recommendations; an exception is
usually somewhere around the corner. Thus, when faced with a particular problem or
opportunity, we need to understand and diagnose the situation and select the strategy most
appropriate under those conditions.101
THE MULTIPLE LEVELS OF ANALYSIS ANCHOR

This textbook divides organizational behavior topics into three levels of analysis: individ-
ual, team (including interpersonal), and organization. The individual level includes the
characteristics and behaviors of employees as well as the thought processes that are attrib-
uted to them, such as motivation, perceptions, personalities, attitudes, and values. The team
level of analysis looks at the way people interact. This includes team dynamics, team deci-
sions, communication, influence, social networks, conflict, and leadership. At the organiza-
tional level, we focus on how people structure their working relationships and on how
organizations interact with their environments.
Although an OB topic is typically pegged into one level of analysis, it usually relates
to multiple levels.102 For instance, communication is located in this book as a team
(interpersonal) process, but we also recognize that it includes individual and organiza-
tional processes. Therefore, you should try to think about each OB topic at the individual,
team, and organizational levels, not just at one of these levels.
The Journey Begins

This chapter gives you some background about the field of organizational behavior. But its
only the beginning of our journey. Throughout this book, we will challenge you to learn
new ways of thinking about how people work in and around organizations. We begin this
process in Chapter 2 by presenting a basic model of individual behavior; then we introduce
over the next few chapters various stable and mercurial characteristics of individuals that
relate to elements of the individual behavior model. Next, this book moves to the team
level of analysis. We examine a model of team effectiveness and specific features of high-
performance teams. We also look at team decision making communication, power and
influence, conflict, and leadership. Finally, we shift our focus to the organizational level of
analysis, where the topics of organizational structure, organizational culture, and organiza-
tional change are examined in detail.
chapter summary
LO1 Define organizational behavior and organizations, The ability to acquire and use knowledge depends on the
and discuss the importance of this field of inquiry. firms absorptive capacity. Intellectual capital consists of
human capital, structural capital, and relationship capital.
Organizational behavior is the study of what people think,
Knowledge is retained in the organizational memory; compa-
feel, and do in and around organizations. Organizations are
nies also selectively unlearn.
groups of people who work interdependently toward some
The high-performance work practices (HPWP) perspective
purpose. OB theories help people (a) make sense of the work-
identifies a bundle of systems and structures to leverage
place, (b) question and rebuild their personal mental models,
workforce potential. The most widely identified HPWP are
and (c) get things done in organizations. OB knowledge is for
employee involvement, job autonomy, developing employee
everyone, not just managers. OB knowledge is just as impor-
competencies, and performance-skill-based rewards. HPWP
tant for the organizations financial health.
improve organizational effectiveness by building human
LO2 Compare and contrast the four current perspectives capital, increasing adaptability, and strengthening employee
of organizational effectiveness as well as the early goal motivation and attitudes.
attainment perspective. The stakeholder perspective states that leaders manage
the interests of diverse stakeholders by relying on their per-
The goal attainment perspective, which states that organiza- sonal and organizational values for guidance. Ethics and
tions are effective if they achieve their stated objectives, is corporate social responsibility (CSR) are natural extensions
no longer accepted because (a) the goals set may be too easy, of values-based organizations because they rely on values to
(b) goals may be too abstract to determine their accomplish- guide the most appropriate decisions involving stakeholders.
ment, and (c) achievement of some goals may threaten the CSR consists of organizational activities intended to benefit
companys survival. society and the environment beyond the firms immediate
The open systems perspective views organizations as financial interests or legal obligations.
complex organisms that live within an external environ-
ment. They depend on the external environment for re-
LO3 Debate the organizational opportunities and challenges
sources and then use organizational subsystems to transform
of globalization, workforce diversity, and emerging
those resources into outputs, which are returned to the envi-
employment relationships.
ronment. Organizations receive feedback from the external
environment to maintain a good fit with that environ- Globalization, which refers to various forms of connectivity
ment. Fit occurs by adapting to the environment, managing with people in other parts of the world, has several economic
the environment, or moving to another environment. and social benefits, but it may also be responsible for work in-
According to the organizational learning perspective, or- tensification and reduced job security and worklife balance.
ganizational effectiveness depends on the organizations Workforce diversity is apparent at both the surface level (obser-
capacity to acquire, share, use, and store valuable knowledge. vable demographic and other overt differences in people) and
the deep level (differences in personalities, beliefs, values, and LO4 Discuss the anchors on which organizational behavior
attitudes). There is some evidence of deep-level diversity knowledge is based.
across generational cohorts. Diversity may offer a competitive
The multidisciplinary anchor states that the field should de-
advantage by improving decision making and team perfor-
velop from knowledge in other disciplines (e.g., psychology,
mance on complex tasks, yet it also brings numerous chal-
sociology, economics), not just from its own isolated research
lenges such as team fault lines, slower team performance,
base. The systematic research anchor states that OB knowl-
and interpersonal conflict. One emerging employment rela-
edge should be based on systematic research, which is consis-
tionship trend is the call for more worklife balance (minimiz-
tent with evidence-based management. The contingency
ing conflict between work and nonwork demands). Another
anchor states that OB theories generally need to consider that
employment trend is virtual work, particularly working from
there will be different consequences in different situations.
home. Working from home potentially increases employee
The multiple levels of analysis anchor states that OB topics
productivity and reduces employee stress, but it may also lead
may be viewed from the individual, team, and organization
to social isolation, reduced promotion opportunities, and ten-
levels of analysis.
sion in family relations.
key terms
absorptive capacity, p. 12 human capital, p. 12 relationship capital, p. 10
corporate social responsibility intellectual capital, p. 10 stakeholders, p. 14
(CSR), p. 16 open systems, p. 8 structural capital, p. 10
deep-level diversity, p. 20 organizational behavior (OB), p. 4 surface-level diversity, p. 19
ethics, p. 16 organizational effectiveness, p. 7 values, p. 15
evidence-based management, p. 23 organizational efficiency, p. 9 virtual work, p. 21
globalization, p. 18 organizational learning, p. 10 worklife balance, p. 21
high-performance work practices organizations, p. 4
(HPWP), p. 13
critical thinking questions

1. A friend suggests that organizational behavior courses are 5. It is said that the CEO and other corporate leaders are
useful only to people who will enter management careers. keepers of the organizations memory. Please discuss this.
Discuss the accuracy of your friends statement. 6. A common refrain among executives is People are our
2. Name some of the practices that Brasilata does differently most important asset. Relate this statement to any
that seem innovative to you. How does this square with twoof the four perspectives of organizational effective-
how you think OK works? Is Brasilata different from ness presented in this chapter. Does this statement
Apple or Google in its innovative strategies? apply better to some perspectives than to others? Why
or why not?
3. A number of years ago, employees in a city water distri-
bution department were put into teams and encouraged 7. Corporate social responsibility is one of the hottest
to find ways to improve efficiency. The teams boldly crossed issues in corporate boardrooms these days, partly because
departmental boundaries and areas of management it is becoming increasingly important to employees and
discretion in search of problems. Employees working in other stakeholders. In your opinion, why have stake-
other parts of the city began to complain about these in- holders given CSR more attention recently? Does abid-
trusions. Furthermore, when some team ideas were im- ing by CSR standards potentially cause companies to
plemented, managers discovered that a dollar saved in the have conflicting objectives with some stakeholders in
water distribution unit may have cost the organization some situations?
two dollars in higher costs elsewhere. Use the open systems 8. Look through the list of chapters in this textbook, and
perspective to explain what happened here. discuss how globalization could influence each organiza-
4. After hearing a seminar on organizational learning, a min- tional behavior topic.
ing company executive argues that this perspective ignores 9. Organizational theories should follow the contingency
the fact that mining companies cannot rely on knowledge approach. Comment on the accuracy of this statement.
alone to stay in business. They also need physical capital 10. What does evidence-based management mean? Describe
(such as extracting and ore-processing equipment) and situations you have heard about in which companies have
land (where the minerals are located). In fact, these two practiced evidence-based management, as well as situa-
may be more important than what employees carry around tions in which companies have relied on fads that lacked
in their heads. Evaluate the mining executives comments. sufficient evidence of their worth.
27
CASE STUDY 1.1 HOSPITALS ARE DRIVING TOWARD A LEANER

ORGANIZATION
Steven L. McShane, University of Western Australia
How is serving surgical patients similar to manufacturing a Flinders Medical Center also adopted lean management
car? The answer is clear to staff at Sunderland Royal Hospital. practices after the South Australian medical facility experi-
The health facility in northern England borrowed several enced severe congestion of patients in its emergency de-
ideas from the nearby Nissan factory, one of the most effi- partment. After mapping out the steps in patients journey
cient car plants in Europe, to improve its day surgery unit. through the department, the staff realized that the process
We took [Sunderland hospital staff] on a tour of our plant, was inefficient and stressful for everyone, particularly as
showing them a variety of lean processes in action, and let lower-priority patients got bumped down the queue when
them decide which ones could be applied back at the hospi- more serious cases arrived. Now, incoming emergency
tal, says a training manager at Nissans factory in Sunderland. patients are immediately streamed to one of two emergency
Lean management involves seeking ways to reduce and teams: those who will be treated and sent home, and those
remove waste from work processes. Employees are typically who will be treated and admitted. This change immediately
involved, where they map out the work process and identify improved efficiency and the quality of patient care.
ways to reduce steps, time, spaces, and other resources with- Bolton Hospitals NHS Trust in the United Kingdom is
out threatening the work objectives. Sunderlands day surgery yet another illustration of how lean management practices
staff were actively involved in applying lean management to can improve organizational efficiency and effectiveness. By
their work unit. After attending Nissans two-day workshop, involving employees in an analysis of procedures, the
they mapped out the work processes, questioned assump- hospital reduced average wait times for patients with frac-
tions about the value or relevance of some activities, and dis- tured hips by 38 percent (from 2.4 to 1.7 days), which also
covered ways to reduce the lengthy patient wait times (which resulted in a lower mortality rate for these patients. By
were up to three hours). There was some initial resistance and smoothing out the inflow of work orders and rearranging
skepticism, but the hospitals day surgery staff soon realized the work process, Boltons pathology department cut the
significant improvements in efficiency and service quality. time to process samples from 2430 hours to just 23 hours
By working with Nissans staff, we have streamlined the and reduced the space used by 50 percent.
patient pathway from 29 to 11 discrete stages, says Anne We know that our case for extra funding will fall on
Fleming, who oversees Sunderlands 32-bed day case unit deaf ears unless we cut out waste in the system, explains
and its 54 staff members. We have done this by reducing Dr. Gill Morgan, chief executive of the UK NHS Confed-
duplication, halving the time that patients spend in the unit eration. Lean works because it is based on doctors, nurses,
to three hours by giving them individual appointment and other staff leading the process and telling us what adds
times, and introducing the just-in-time approach to the value and what doesnt. They are the ones who know.103
patient pathway. Fleming also reports that Sunderlands Discussion Questions
operating theaters are now much more efficient.
Sunderland Royal Hospital is one of many health care cen- 1. What perspective(s) of organizational effectiveness best
ters around the world that are improving efficiency through describe(s) the application of lean management practices?
lean thinking. After receiving training in Japan on lean prac- Describe how specific elements of that perspective re-
tices, several teams of doctors, nurses, and other staff from late to the interventions described in this case study.
Virginia Mason Medical Center in Seattle, Washington, rede- 2. Does lean management ignore some perspectives of
signed their work flows to eliminate 34miles of unnecessary organizational effectiveness? If so, what are the unin-
walking each day. Park Nicollet Health Services in Minne- tended consequences of these practices that might
apolis, Minnesota, improved efficiency at its ambulatory undermine, rather than improve, an organizations
clinic to such an extent that the unit does not require a patient effectiveness?
waiting area. One Park Nicollet team worked with orthopedic 3. In what situations, if any, would it be difficult or risky
surgeons to reduce by 60 percent the variety of instruments to apply lean management practices? What conditions
and supplies they ordered for hip and knee surgeries. make these practices challenging in these situations?
CASE STUDY 1.2 PIXAR MAGIC

Steven L. McShane, University of Western Australia
One of Robert Igers first tasks as Walt Disney Co.s new own animation unit, Walt Disney Animation Studios. The
CEO was to acquire Pixar Animation Studios and put its studio that brought us Mickey Mouse and The Lion King
leaders, Ed Catmull and John Lassiter, in charge of Disneys had become moribund over the past decade, eclipsed by
28
Pixars award-winning productions. Disney already had chance encounters with people from other projects. When
lucrative distribution rights to Pixars first five films, in- people run into each other and make eye contact, innova-
cluding any sequels, but Iger wanted something much more tive things happen, says Pixar director Brad Bird.
valuable: He wanted the practices that have made Pixar a Third, Pixars egalitarian, no-nonsense, perfectionist
powerhouse filmmaker, from Toy Story to Up. culture is another reason the animation studios staff work
Pixars success is founded on the notion that companies effectively. The company gives power to its production
depend on the quality of their employees and how well they teams rather than to senior executives, but these teams are
collaborate with one another. From the very beginning, we also ruthless at writing and rendering scenes several times
recognized we had to get the best people, technically, from until they look right. All employees, from entry-level new-
the computer science world, and from the artistic filmmak- comer to the CEO, are encouraged to be creative and offer
ing animation world, and get them working together, ex- candid feedback about work in progress. Production teams
plains John Lasseter, who is now chief creative officer of have regular sweatbox sessions to discuss problems
both Pixar and Disney Animation Studios. That, right openly. Even the most successful films undergo a post-
there, is probably the secret to Pixar. mortem to discover how they could have been improved.
Pixar enables people to work together in several ways. Our job is to address problems even when were success-
First, the company relies on long-term employment rela- ful, explains Pixar/Disney Animation president Ed
tionships rather than short-term project contracts. These Catmull, whose leadership has been identified as the foun-
long-term relationships improve team development and dation of Pixars unique culture.104
social networks. The problem with the Hollywood model
is that its generally the day you wrap production that you Discussion Questions
realize youve finally figured out how to work together, says 1. Explain Pixars effectiveness as an organization using
Randy Nelson, head of Pixar University. Weve made the any two perspectives of organizational effectiveness.
leap from an idea-centered business to a people-centered 2. Scanning through the chapter titles of this book, which
business. Second, Pixars campus in Emeryville, California, topics seem to dominate Pixars organizational practices?
enables employees to work well together. The buildings were Why would these practices be emphasized in this type
designed to cluster people into teams yet also encourage of organization?
WEB EXERCISE 1.3 DIAGNOSING ORGANIZATIONAL STAKEHOLDERS

PURPOSE This exercise is designed to help you under- articles, website statements, and other available sources.
stand how stakeholders influence organizations as part of Stakeholders should be rank-ordered in terms of their per-
the open systems anchor. ceived importance to the organization.
Students should be prepared to present or discuss their
MATERIALS Select a company and, prior to class, retrieve rank ordering of the organizations stakeholders, including
and analyze publicly available information over the past year evidence for this ordering.
or two about that company. This information may include Discussion Questions
annual reports, which are usually found on the websites of
publicly traded companies. Where possible, you should also 1. What are the main reasons certain stakeholders are
scan full-text newspaper and magazine databases for articles more important than others for this organization?
published over the previous year about the company. 2. On the basis of your knowledge of the organizations
environmental situation, is this rank order of stake-
INSTRUCTIONS The instructor may have you work holders in the organizations best interest, or should
alone or in groups for this activity. Students will select a other specific stakeholders be given higher priority?
company and investigate the relevance and influence of 3. What societal groups, if any, are not mentioned as
various stakeholder groups on the organization. Stake- stakeholders by the organization? Does this lack of
holders can be identified from annual reports, newspaper reference to these unmentioned groups make sense?
SELF-ASSESSMENT 1.4 IT ALL MAKES SENSE?

PURPOSE This exercise is designed to help you compre- INSTRUCTIONS (Note: Your instructor might conduct
hend how organizational behavior knowledge can help you this activity as a self-assessment or as a team activity.)
understand life in organizations. Read each of the statements below and circle whether each
29
statement is true or false, in your opinion. The class will 5. True False Companies are more successful when
consider the answers to each question and discuss the im- they have strong corporate cultures.
plications for studying organizational behavior. 6. True False Employees perform better without
Due to the nature of this activity, the instructor will pro- stress.
vide the answers to these questions. There is no scoring key 7. True False The best way to change people and
in Appendix B. organizations is by pinpointing the
1. True False A happy worker is a productive worker. source of their current problems.
2. True False A decision makers effectiveness in- 8. True False Female leaders involve employees in
creases with the number of choices or decisions to a greater degree than do
alternatives available to her or him. male leaders.
3. True False Organizations are more effective 9. True False The best decisions are made without
when they minimize conflict among emotion.
employees. 10. True False If employees feel they are paid un-
4. True False Employees have more power with fairly, nothing other than changing
many close friends than with many their pay will reduce their feelings
acquaintances. of injustice.
After reading this chapter, if you feel that you need additional tips for learning this material, see www.mhhe.
com/mcshane6e for more in-depth information and interactivities that correspond to this chapter.
30

Sample Chapter PDF

Diunggah oleh

Informasi Dokumen

Judul Asli

Hak Cipta

Format Tersedia

Bagikan dokumen Ini

Bagikan atau Tanam Dokumen

Opsi Berbagi

Apakah menurut Anda dokumen ini bermanfaat?

Apakah konten ini tidak pantas?

Hak Cipta:

Format Tersedia

Sample Chapter PDF

Diunggah oleh

Hak Cipta:

Format Tersedia

mcs12648_ch01_002-031.

indd Page 2 10/17/11 1:53 PM user-f462 /Volumes/206/MH01510/mcs12648_disk1of1/0078112648/mcs12648_pagefiles

PART ONE: INTRODUCTION

LO1 Define organizational behavior LO3 Debate the organizational

Steel can manufacturing may be a mature industry, but the folks at

employee knowledge and motivation to fuel its extraordinary productivity and

places to work in that country.

At the heart of Brasilatas business model is the Simplification Project (Projeto

production facilities to think up as many suggestions as possible. The Simplification

internal innovative environment and entrepreneurial spirit, explains Brasilatas CEO

Antonio Carlos lvares Teixeira, who is also a business professor.

signs an innovation contract that reinforces their commitment to continuous

rewarded with bonuses representing 15 percent of net annual profits.

layoff policy even during the worst downturns.

also emphasizes employee initiative and open communication. In our opinion,

innovative action is stimulated by a corporate environment where the

tolerated, explains Brasilatas CEO Teixeira.1

4 Part One Introduction

Welcome to the Field of Organizational Behavior!

The Field of Organizational Behavior

Chapter One Introduction to the Field of Organizational Behavior 5

Until the 1930s, most

6 Part One Introduction

WHY STUDY ORGANIZATIONAL BEHAVIOR?

Organizational Behavior Is for Everyone Organizational behavior is important

Chapter One Introduction to the Field of Organizational Behavior 7

Perspectives of Organizational Effectiveness

8 Part One Introduction

OPEN SYSTEMS PERSPECTIVE

EXHIBIT 1.1 Open Systems Perspective of Organizations

Human resources Engineering

subsystem Shareholder dividends

Information Transforming inputs to outputs

Financial resources Managerial Marketing/Sales

Chapter One Introduction to the Field of Organizational Behavior 9

OrganizationEnvironment Fit According to the open systems perspective, orga-

Internal Subsystems Effectiveness The open systems perspective considers

10 Part One Introduction

ORGANIZATIONAL LEARNING PERSPECTIVE

Intellectual Capital: The Stock of Organizational Knowledge The orga-

Chapter One Introduction to the Field of Organizational Behavior 11

EXHIBIT 1.2 Knowledge Sharing

Knowledge Acquisition Knowledge Use

Organizational Learning Processes Organizations nurture their intellectual

intellectual capital human capital structural capital relationship capital

12 Part One Introduction

learning process by encouraging experimentation and open communications and

Absorptive Capacity An important prerequisite for acquiring, sharing, and using

Organizational Memory and Unlearning Corporate leaders need to recognize

Chapter One Introduction to the Field of Organizational Behavior 13

HIGH-PERFORMANCE WORK PRACTICES

14 Part One Introduction

American Express has taken a organizational performance, but recent

Chapter One Introduction to the Field of Organizational Behavior 15

Governments Labor Unions

ignoring unethical business practices (such as child labor) in countries where it

Values, Ethics, and Corporate Social Respon-

16 Part One Introduction

Chapter One Introduction to the Field of Organizational Behavior 17

18 Part One Introduction

High Expectations for Corporate CONNECTING THE DOTS:

57% reputation for social responsibility is a factor in retaining provide

54 % of employees worldwide who say their company makes